''Financial Sense Newshour'' interviews Murphy, Embry, and King

Section:

By Nicole Mordant
Reuters
Friday, February 18, 2005

http://www.reuters.com/financeQuoteCompanyNewsArticle.jhtml?
duid=mtfh79704_2005-02-18_22-35-10_n17302066_newsml

VANCOUVER, British Columbia -- "If at first you don't succeed, try,
try again" could become the motto of North America's merger-obsessed
gold industry.

Despite an unimpressive track record of five failed takeovers and
just one success in the past year, millions of dollars spent on
advice and wiped off market values, analysts say big, but
especially, mid-sized miners are as eager as ever to purchase.

"Several companies need to do transactions in order to maintain
their growth and accelerate it because this industry shot itself in
the foot for the past 10 years by not spending on exploration," said
Gordon Bogden, managing director of investment banking at National
Bank Financial.

This week, Canada's Goldcorp Inc. sealed a $2 billion deal to buy
Wheaton River Minerals Ltd., the first big gold merger to get the
blessing of shareholders in a year.

Wheaton is no stranger to taking a trip to the altar, having tried
last year to tie the knot with Iamgold Corp. After that romance
fizzled, Iamgold attempted a union with South Africa's Gold Fields
Ltd. but that was scuppered by a bid for Gold Fields as the merger
musical chairs continued.

Gold miners basically have two choices to replace mined-out metal
and expand reserves: find it yourself or buy it.

As big discoveries can be likened to the proverbial needle in a
haystack and, in any event, it can take seven to 10 years from grass-
roots exploration to production, it is not surprising that companies
are looking for a quicker route.

"No one has that time in this window," Bogden said, talking of
miners' desire to take advantage of the best gold prices since 1988,
before the soft U.S. dollar, the key driver of bullion prices in
this cycle, rebounds again.

Gold prices rise on a weaker greenback because it becomes cheaper to
buy the dollar-priced metal in other currencies.

This week, a softer U.S. dollar again helped boost gold miners and
base metal shares on the Toronto Stock Exchange, helping push the
S&P/TSX composite index up 100.25 points, or 1 percent, to 9,658.75
over the five days.

Analysts expect most of the merger action to be around mid-sized
producers like Agnico-Eagle Ltd., Iamgold, Kinross Gold Corp., and
the newly enlarged Goldcorp, which has already said it's scouting
for an acquisition or two this year.

"A lot of these guys have lived off a quality asset, but to build
the business beyond that is very difficult," said Darko Kuzmanovic,
who manages the Prudent Global Gold Fund and Prudent Global Natural
Resources Fund at David W. Tice & Associates.

"That's why I think it's easier for them to consolidate rather than
to take the risk that a Meridian took," he said, referring to
Meridian Gold Inc.'s run-in with environmentalists and local
residents in Argentina, which shut down its Esquel development.

UBS analyst Tony Lesiak suggests a marriage between the "New
Goldcorp" and Agnico-Eagle, as the target's production fits the size
Goldcorp-Wheaton are looking for, both firms produce base metals in
addition to gold, and Agnico has some useful tax pools.

Kuzmanovic suggests the mid-tiers could buy smaller exploration
companies with big in-development projects, but only once these
ventures are fully permitted and less risky.

Names that come up include Crystallex International Corp. and its
Las Cristinas project in Venezuela, Gabriel Resources Ltd. and its
Rosia Montana find in Romania, as well as Minefinders Corp Ltd.,
Alamos Gold Inc., and Gammon Lake Resources Inc.

The push for relationships could also come from the juniors' side
because of the rocketing costs for building mines as steel and
energy prices soar, says John Bowles, British Columbia mining
practice leader at PricewaterhouseCoopers.

"There are a lot of small companies with big projects and, with
prices where they are going, they are looking for partners to
develop them," Bowles told Reuters.

Whatever happens, investment bankers, lawyers and journalists are
likely to be kept busy again this year.

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